Tag Archives: millennials

Builder magazine: are millennials ushering McMansions out?

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Builder continues the debate of whether millennials will help McMansions disappear:

But the millennials inhabiting high-tech, yet cozy student housing and apartments don’t have outsized space expectations. Over the next decade, their preference for the walkable convenience that often accompanies smaller living spaces will collide head on with their parents’ (and grandparents’) insatiable addiction for square footage.

Will millennials’ maturation force home builders to come up with walkable communities and smaller, more innovative homes that might, finally, kill the McMansion? Or will it lead millennials to make the decision to abandon walkability and convenience for more square footage?

No one really knows the answers to these questions, but trends demonstrate that Gen Yers—many of whom currently are living in student housing and apartments—have different expectations than the generations before them. Even if they eventually end up in single-family homes in the suburbs, their acceptance of efficient spaces might change the game for many builders. But without public policy changes and rethinking what home value really means, their preferences for efficient spaces may do little to cut square footage…

Despite these testimonials, even the most resolute urbanist wouldn’t proclaim that millennials are going to forever eschew the size and acreage of the suburbs to gather in cramped apartments in the city. For many, life will evolve, priorities will change, and the desire for a yard, more space, or a good school system for children will win out over having multiple trendy bars down the street…

Even if millennials do follow their parents’ path to the suburbs, many architects predict (and hope) that the efficient designs they’ve become accustomed to in college and apartments will follow them to their single-family home.

As noted elsewhere, no one really knows what will happen yet there are plenty of people with opinions and hopes. Give it a few years and decades to play out.

At the same time, even changing tastes among millennials as a group doesn’t necessarily mean the disappearance of McMansions. Millennials are unlikely to completely kill McMansions. Like now, there could still be a significant minority of that generation that still want McMansions and because of the higher profit margins with such homes, there will be builders ready to build them. Additionally, there will still be a lot of existing McMansions that, like other homes, will continue to generate sales and interest. Unless, of course, there is some sort of rapture for only McMansion owners – perhaps this is the sort of scenario those who dislike McMansions could get behind.

Americans under 35 have lowest recorded homeownership rate; what does it mean?

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The latest Census data shows Americans under 35 now have the lowest recorded homeownership rate for that age group:

In the second quarter of 2014, the rate of homeownership among householders who are under 35 dropped to the lowest number ever reported since the Census Bureau first started recording quarterly homeownership rates 21 years ago.

In a news release published this week, the Census Bureau said that the homeownership rate among householders under 35 was 35.9 percent in the second quarter of 2014. That number was not only lower than any quarterly rate going back to the fourth quarter of 1993 (the first quarterly rate reported) but was also lower than any of the annual homeownership rates for under 35s that the Census Bureau has published since 1982.

However, a Census Bureau official also said that the 35.9 percent homeownership rate for under 35s for the second quarter was not statistically different from the rate for the first quarter of this year (36.2 percent) or the fourth quarter of 2013 (36.8 percent).

These figures on their own could support a number of different arguments about the fate of homeownership in the United States. On one side, those promoting more urban lifestyles could say millennials aren’t buying more homes because they are moving to cities and looking to rent units in order to have more flexibility and take advantage of the urban lifestyle. On the other side, others might note that this data comes 5+ years into the bursting of a housing bubble and that millennials will show more interest in homeownership when the economy picks up. Yet, to make such claims with this data alone would be irresponsible. To be honest, we need a lot more data than this to support any argument and know whether younger Americans do or do not want to own homes in similar numbers to past generations.

See the full Census report regarding 2Q homeownership rates here.

Selling smaller yet posh apartments plus an urban lifestyle to younger renters in Tampa Bay

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The Tampa Bay real estate market may have picked up again but it includes some new options: stylish, small, urban apartments for millennials.

So last month, the 28-year-old dietitian moved into a stylish flat in downtown’s newest apartment tower, Modera Prime 235. The trade-off? It cost $1,330, double her last rent, for a one-bedroom matchbox spanning 700 square feet.

“I knew I wasn’t going to be in a McMansion. . . . but it’s definitely enough space for me,” she said. “That price was a lot, like, ‘Oh my goodness, I’m going to have to watch my budget.’ But I’ve enjoyed every penny I’ve paid for it so far.”

Developers are racing to build more than 8,000 new apartments across Tampa Bay, sparking one of the biggest building surges since the housing bust. But to win big rents from millennials, the biggest generation in American history, they’re building in a way that looks nothing like the suburban booms of years past.

The emerging apartment complexes are more closely connected to city centers and packed with metropolitan perks, but they’re also surprisingly pricey and getting smaller. While the median new American home swelled last year to a record-breaking 2,384 square feet, Census data show, the nation’s median new rentals have narrowed to 1,043 square feet, the smallest since 2002.

“The younger generation, under 35, they don’t want to own homes. They don’t want a yard. … They watched what happened (during the recession), watched their parents lose their houses,” said John Stone, a managing director of multifamily housing for Colliers International, a real estate brokerage. “They have a different taste, a different value system. . . . These kids are more than happy to pay $1,200 in rent to walk out their door and immediately go to their favorite bar, their favorite restaurant.”

This has been a trend predicted for a while now by a number of people ranging from Richard Florida to James Howard Kunstler. Because of a variety of pressures from the increase in gas prices, the limited possibilities and decentralization of suburban sprawl, a changed job market, and new technologies, younger Americans may just want desire more exciting urban neighborhoods (though these don’t necessarily have to be in the city center or even in large cities) and smaller homes and private spaces. This is happening many metro areas throughout the United States but it is unclear how big the phenomenon might grow or how much other groups of Americans want to join millennials/the Creative Class.

Yet, as the article notes, this is all tending to lead to a segmented housing market with large suburban McMansions (or something like them), trendy yet small urban apartments for those who can afford them, and the lower end of the housing market that is still struggling.

Millennials move into suburbs and less dense big cities and other urban population shifts

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A new report from Trulia looks at where millennials and Baby Boomers moved as well as population growth in cities:

Extrapolating from the census data, a separate report from San Francisco-based real estate research firm Trulia Inc. showed where different age groups lived in 2013. Contrary to popular thought, millennials – Americans 20 to 34 years old – actually moved more into big-city suburbs and lower-density cities rather than dense urban areas. The three fastest growing millennial metropolitan areas were Peabody, Massachusetts, a town north of Boston, Colorado Springs, Colorado and San Antonio.

Americans 50 to 69 years old also flocked most to the “second quartile of counties,” wrote Trulia Chief Economist Jed Kolko, or big city suburbs and lower density cities. The fastest growing areas for baby boomers were Austin, Texas, Raleigh, North Carolina, and Dallas – all places that already have high concentrations of young people. In fact, Austin has the highest share of millennials than any other large metropolitan area, the Trulia report showed…

“The trend in the past year was that boomer growth [took place] in millennials’ favorite places,” Kolko says.

The population of the youngest Americans, or those ages 5 and younger, grew fastest in big cities like Washington, D.C. and New York. Frey has studied demographic changes in New York and says since 2010, there’s been a growth in the under 5 population in all of the boroughs except for Staten Island.

The biggest surprise here seems to be that more millennials moved to “big-city suburbs & lower-density cities.” At the same time, the population growth differences between the four quartiles of counties are not that large – the analysis shows roughly 0.2% differences.

Another note: the South and West continue to lead the way (all those less dense cities due to different zoning rules, annexation policies, and waves of development) in this analysis with the occasional city from elsewhere sneaking in occasionally.

Sociologist argues hidden shame destructive in modern society

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Sociologist Thomas Scheff argues that hidden shame is a large problem in modern society:

According to Scheff a society that fosters individualism (ours, for example) provides a ripe breeding ground for the emotion of shame because people are encouraged to “go it alone, no matter the cost to relationships,” he said. “People learn to act as if they were complete in themselves and independent of others. This feature has constructive and creative sides, but it has at least two other implications: alienation and the hiding of shame.”

Scheff noted that while shame is no less prevalent now than in previous years or decades or generations, it is more hidden. “Shame is a biological entity like other emotions, but people are more ashamed of it than they are of the others,” he said. “The hiding of emotions is more widespread in modern societies than in traditional ones.”…

The problem with that kind of thinking, however, is that shame is, in reality, a very useful emotion. “Shame is the basis of morality,” Scheff said. “You can’t have a moral society without shame. It provides the weight for morality. There are a hundred things in your head about what you should or shouldn’t do, but the one that hits you is the one that has shame behind it.”

Scheff suggests that shame — or the reaction to it — can manifest itself in larger acts of aggression, such as wars and other military conflicts. “Especially for leaders, both shame and anger are carefully hidden behind a veil of rationality,” he writes in the article. “The Bush administration may have been deeply embarrassed by the 9/11 attack during their watch and their helplessness to punish the attackers. The invasion of Iraq on the basis of false premises might have served to hide their shame behind anger and aggression.”

I remember reading Scheff’s work in a microsociology course in grad school where he was cited as a key example of the growing body of research in the subfield of the sociology of emotions. While we tend to chalk up emotions to an individual’s psychological and physiological state, emotions that we feel and how we can express them are also dependent on social forces. Thus, if individualism is a key feature of early 21st century life, particularly for younger adults/millennials, displaying feelings of shame contradicts this individualistic approach. For example, one of the findings about younger adults in the National Study of Youth and Religion (with this particular finding discussed in Souls in Transition) is that they have very few regrets about their past actions. This is indicative of an individualistic approach to life: regrets may be based on the idea that the individual didn’t live up to some standard. But, to have shame or regrets, the individual has to be anchored to a particular moral system.

Scheff’s solution to hidden shame?

The answer, according to Scheff, is to have a good laugh. “That is, laugh at yourself or at the universe or at your circumstances, but not at other people. Most of the laughing we do in comedy is good. No matter the actors, we are really laughing at our own selves that we see in their foolishness.”

It would then be interesting to study who using humor laughs more than themselves than at others. Is most of our humor/comedy today compared to the past directed at others rather than exploring our own shame and embarrassing moments?

Can Costco thrive if younger Americans don’t have the big houses to store all the bulk items?

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Costco’s earnings have been down recently, leading to questions about whether younger Americans want the items they have:

The suburban, car-loving, McMansion-owning parents of millennials represent Costco’s core customer base. But what about millennials themselves?…

But the fact that in early March Costco reported lower-than-expected earnings and its stock price has slumped now has some wondering if the company can stay on its hot growth streak going forward. In particular, concern is being raised that Costco’s membership model and its bulk-goods products don’t appeal to the nation’s young consumers—and that the Costco experience might not be a good match for the millennial generation even after they grow older and have families.

It’s understandable that Costco’s customer base skews older. A car is all but a necessity for the typical “stock up” visit to Costco, and compared to older generations, millennials tend to not own cars and don’t seem to want to own cars. Most Costco stores are in suburban locations, while millennials tend to prefer urban living, and even if they are among the relatively few of their peers who could afford to buy a home, home ownership is less important to them than it was to their parents and grandparents as young adults. So … if you don’t have a car, and you don’t have the money or interest to stock up on two years’ worth of paper towels or mustard, and you wouldn’t have the space in your apartment to store this kind of stuff even if you wanted to, then there’s not much sense in shopping at Costco…

In general, Costco’s plan to win over the younger generation seems to be in the taking of baby steps toward meeting their preferences as consumers, while basically just waiting until millennials grow up, buy cars, move out to the suburbs, and (fingers crossed) feel like a Costco membership works for their households. For the time being, Costco doesn’t work for young people simply because “you’re not going to stick big vats of mayonnaise and big stacks of toilet paper in a small apartment,” McAdams Wright Ragen analyst Dan Geiman explained to the Seattle Times. Still, Geiman applauded Costco’s efforts to woo younger shoppers. “Anything you can do to lower the age of your target market is going to be a positive in the longer term,” he said.

Based on some of the metrics mentioned in this story (such as the number of Facebook likes Walmart and Target have compared to Costco), American consumers don’t see big box stores all in the same way. Could the same thing be true for millennials? While there is some data suggesting a number of them want to live in more urban areas, this does not necessarily preclude abandoning all of the shopping patterns more commonly associated with a suburban lifestyle. Perhaps Costco is not as well known, their marketing to younger shoppers has been limited, and these younger shoppers don’t see much appeal in a warehouse sort of store (where is the cool factor in that – Target, in contrast is a chicer big box store and Walmart can be enjoyed ironically).

While companies need to have a broad case of customers, I wonder if Costco could still survive for quite a while, like the TV networks, in focusing on the bulge of older Americans who are also more likely to have larger houses.

Anger directed at urban cyclists and city bike lanes really about fears that younger Americans don’t want sprawling suburbs?

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Complaints about urban biking and new bike lanes might be less about biking and more about what younger Americans don’t want: the sprawling suburbs.

All this sounds like a nightmare scenario if you live in the suburbs. Gas prices rise and housing prices fall, eating into liquid capital and equity. Families with the ability to move return back to the city, depressing housing prices even further. Declining property tax revenues and a fleeing upper-middle-class undermine previously excellent schools. At best, suburbanites take a huge hit on depreciating houses; at worst, they’re stranded in decaying neighborhoods, cut off by isolating new infrastructure…That’s where I see an undercurrent of Millennial resentment (we’ll spot Kass a decade or so on “grunge;” when you’re out across the county line, the news travels slower). The boomers escaped cities in decline, investing sweat equity earned in office parks into a house and two cars, the gas taxes they paid into epic interchanges, and their high property taxes into excellent schools.

And the little bastards who went to those excellent schools don’t want that inheritance. They want to ride their car shares from their rented apartments to mass transit, making the last-mile commute on shared bikes (they don’t even own bikes!) to virtual startups in work-share spaces.

From the perspective of postwar America, it looks like a whole lot of nothing, an unsettled and rootless future. Where they’re going, they don’t need… roads…

But it’s the future we’re being promised by a lot of people in position to make it happen, who threaten to reverse—to invert—what their parents spent a lifetime building. It’s scary, and not just on a merely economic level. And the people out there who are so angry about it aren’t just trying to outrun a few three-speed, step-through shared bikes; they’re trying to outrun the future, and you’re in the way.

Moser is arguing the bike lanes are just a sign of bigger trends at work, as suggested in books like The Great Inversion and The End of the Suburbs. This is really about a changed way of life, a different way of thinking about the American Dream, trading suburban spaces for new iPhones and exciting urban experiences the creative class desires. I think Moser is right to be skeptical; these changes will take time as well as a lot of collective action. At the same time, there is a lot of conversation about denser suburbs and returning to cities. Of course, this doesn’t mean such moves solve all the problems; there are still plenty of poor urban neighborhoods and suburbs that are left behind in the movement of what might be largely middle- to upper-class residents who can afford these changes.

How much irony is there here that the suburbs might have actually provided the “unsettled and rootless future” that younger Americans may now not want? Think about classic suburban critiques like American Beauty or the Arcade Fire album The Suburbs. The suburbs were viewed by many as the places to escape the problems of the city – everything from corrupt morality, dirtiness (factories, pollution, horses in the street everywhere, etc.), new populations – and yet the suburbs clearly have their own problems.

Millennials eat out 199 times a year on average

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A larger article about new trends in eating in America includes these figures about how much millennials eat out:

Disproportionately affected by the recession, the average millennial is expected to make 199 visits this year, down from 250 in 2008. But the restaurants they frequent are some of the fastest-growing chains.

This seems really high to me but it also fits with being in a certain stage in life. People eat roughly 1,000 times a year (give or take some meals) so eating out 199 times is roughly one-fifth. I have never gotten anywhere near these kinds of numbers myself but I could understand why it happens. It takes a lot of time to cook from planning out meals to buying groceries to cooking to cleaning up. Especially if millennials are consumed by their career, all of this business about food may just be too much. Eating can often be a social event, whether with co-workers or friends or family. On the other hand, eating out is often way more expensive – so perhaps it is a trade-off of time versus money. Also, many restaurants of today lack character or give you much of a reason to want to stick around outside of the immediate people you are with. And, maybe this isn’t just about millennials: I’ve seen figures in recent years that suggest 1/4 of American adults eat fast food every day.

All of this reminds me of Michael Pollan’s writings about how we treat food in the United States. Instead of eating natural food in relaxed and sociable settings (that can take hours – so perhaps you lose the time advantage), we tend to eat to be filled up or too have the proper amount of nutrients.

So how do restaurants try to appeal to millennials? Here is how one restaurant does it: by appealing to customization.

To appeal to millennials, Harald Herrmann, CEO of Yard House, a 42-unit chain focused on American fare and a vast beer selection, said customization is key.

“They don’t want to be confined to anything,” Herrmann said. “If you can put an offering out there that allows four to five millennials the opportunity to behave any way that they want and make decisions on the fly in an environment that’s casual and fun in a way that they can be expressive, then you’re onto something.”

At Yard House, Herrmann said, 30 entrees can be made vegetarian. He added that many groups of young customers eat their meals family style, ordering a number of dishes to pass around.

The ability for self-expression has also proved crucial in keeping millennial employees happy.

The chain, which works hard to include employee feedback, recently made visible tattoos acceptable for employees.

One other thought: I’ve seen a number of articles lately about the potential purchasing power of millennials. But, without good jobs and perhaps more stable situations, this spending is not going to happen at the levels it could. So…why don’t many politicians talk about this?

Trying to predict the future driving habits of millennials

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The auto industry and suburbs might be at stake: as millennials age, will they continue to drive less than their parents?

“We’ve basically assumed in transportation planning for decades upon decades that the amount of vehicle travel and per capita VMT can go in only one direction, and that’s up,” says Tony Dutzik, a senior policy analyst for the Frontier Group, a public interest think tank. “And we have been planning our transportation system based on that assumption.”

Data from the last few years clearly show that this axiom is no longer true. So what happens next? In an effort to at least sketch out some of the possible scenarios, the Frontier Group and the US PIRG Education Fund today released a report outlining three alternative futures for America’s relationship to the car.

One assumes that Millennials will eventually revert to the driving patterns of their parents (the blue “Back to the Future” scenario on the below graph). The second assumes that America is in the midst of an enduring shift toward less driving, brought about in large part by the permanent new preferences of Millennials. And the last scenario assumes that the recent decline we’ve seen in driving will continue apace…

The other two scenarios are built on something of a mystery. Researchers have not yet been able to disaggregate how much of our current decline in driving has been attributable to gas prices, or the economy, or changing attitudes toward car ownership or urban living. But it’s been driven by something. And in these two futures, Dutzik says, “whatever constellation of things it is that has caused the shift in per capita driving over the last decade – we think that’s a real thing.”…

Millennials will inevitably wind up driving more than they do today as they age. This is virtually always true of people in their 20s as they enter their 30s and beyond. Certain stages of life demand more use of a car than others. But the question is: by how much? And by how much compared to their parents?

I don’t envy those trying to make these projections when there are a number of unknowns. And, if Millennials are not driving, how are they commuting (or working from home) instead? A lot of money could be at stake in these future patterns, whether it is spent on maintaining existing infrastructure or providing new options (like denser suburbs, more mass transit, more biking opportunities, etc.).

Millennials want smaller, smarter, purposeful, customizable homes

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A new real estate survey from Better Homes and Gardens suggests Millennials have different tastes in homes:

Better Homes and Gardens® Real Estate today released national survey findings of 18-35 year-old Americans that reveal the next generation of homeowners are rewriting the rules to homeownership and reinterpreting traditional norms to fit their values. Results indicate that the next generation of homeowners seeks essential, purposeful homes (77%) equipped with the technological capabilities they have grown accustomed to, as opposed to stereotypical luxury homes preferred by many in their parents’ generation. The findings also demonstrate that 82 percent of “Millennials” surveyed embrace their independence with gusto and prefer to handle home improvements on their own instead of turning to their parents for money; a stark contrast to the general misconception that paints young Americans as coddled or entitled.

“It’s critical that real estate professionals understand what embodies a quintessential home for the Millennial generation, which vastly differs from the traditional norms of generations before them,” said Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC. “These survey findings allow our brand to continue to best serve the next generation of homebuyers and find homes that can or do appeal to their lifestyles and unique spirit. Understanding technologies to communicate with this generation is now only one piece of the puzzle for agents; ‘smart’ technological capabilities must now be ingrained into the home itself.”…

Unlike their Baby Boomer parents, 77 percent of Millennials surveyed would prefer an “essential” home compared to a grand stereotypical luxury home. This generation wants their living quarters to be as unique as they are; more customized and less “cookie cutter” (43%). To that end, Millennials seek for each room of their home to serve a purpose fit for their lifestyle. For instance, 1 in 5 of survey respondents agree that “home office” is a more appropriate name for their dining room based on what they typically use it for, and 43 percent would like to transform their living room into a home theater.

If this is true across the board for Millennials, what sort of current housing options appeal most to them? Gentrifying neighborhoods? Urban lofts? New Urbanist developments? It would be fascinating to see some builders and developers go after this age group like they might with Dell Webb type communities that are clearly intended for a certain age range. However, this might not be as lucrative as providing housing for older buyers and such a sales pitch might go against the independent streak of Millennials…